The Tate's Cairn Tunnel Company Limited has applied for 13 to 28 percent toll increase. If approved, the toll for private cars and taxis will rise HK$3 to HK$15. The company's last application for a toll hike was in December 2006.

The Transport & Housing Bureau submitted the government paper in regard to the application to the Legislative Council yesterday.

The company has proposed to increase tolls for various kinds of vehicles.

According to the proposal, the toll for light buses and light goods vehicles will have the highest percentage increase (28 percent) and will be revised from HK$18 to HK$23.

The government paper revealed that the company had suffered an accumulated loss of HK$53 million by the end of June 2007.

The loss means the company is HK$2,343 million short of the expected cumulative profit of HK$2,290 million.

According to the company, it would be able to clear the accumulated loss and have an accumulated profit of HK$93 million by the end of 2007/08, the paper said.

The paper explained that the poor financial performance was due to a lower toll revenue caused by the lower-than-expected traffic volume.

According to the paper, the company is expecting to attain an internal rate of return of 8.47 percent over the franchise period ending in July 2018 if the proposed toll increases are put in place.

If there is no toll increase before the franchise ends, the company will only achieve returns of 5.72 percent.

The company has the right to resort to arbitration if the government rejects the application for a toll increase.

The Tate's Cairn Tunnel has had four toll increases since its operation started in June 1991: May 1995, November 1996, January 2000 and August 2005.

The company has a 30-year franchise to operate the Tate's Cairn Tunnel from July 1988.

As the application for toll increase was put to the table, Financial Secretary John Tsang urged public organizations to demonstrate social responsibility at the Legislative Council.

"Here I ask all public organizations to show social responsibility when applying for price adjustments," he said.

"Public organizations should consider the difficulties that the public has to face in times of inflation, and balance profit and social responsibility," he said.

Academics and the transport trade said the proposed double-digit toll increase is too big.

Associate professor from the Department of Civil & Structural Engineering at the Hong Kong Polytechnic University Hung Wing-tat said the company has picked the right time to ask for a toll increase.

"As the government is going to carry out maintenance works on the Tuen Mun Highway this year, vehicles will be forced to use the Tate's Cairn Tunnel," he said.

But he noted that unless bus fares are also revised up, the reaction of passengers will not be too big towards the toll increase.

He estimated that transportation providers will react strongly to the toll hike.

Taxi & Public Light Bus Concern Group chairman Lai Ming-hung said the toll increase will not have a big effect on the taxi business if passengers are willing to pay for the extra HK$3.

He pointed out that there is no public light bus that operates through the Tate's Cairn Tunnel.

(HK Edition 04/24/2008 page1)